Minister of Tourism, Patricia de Lille, said the relaunch of the TEF in 2023 and the subsequent application process saw a high level of interest from businesses applying for funding. Picture: Ayanda Ndamane / Independent Newspapers
Minister of Tourism, Patricia de Lille, has berated the slow pace of disbursements from the R1.2 billion Tourism Equity Fund (TEF) aimed to help black businesses in the tourism sector.
This comes as only 20 applications from businesses amounting to R301 million have been approved under the R1.2bn TEF over the last 12 months.
KwaZulu-Natal leads in both submissions and approvals, recording five approvals, followed by approvals for businesses in Gauteng, the Eastern Cape, Limpopo, the Western Cape and the Free State. Two of the approved applications are for new businesses and 18 are for expansion of existing businesses.
The TEF is an initiative by the Department of Tourism to provide financial support to tourism enterprises and to transform the sector.
It is managed by the Small Enterprise Finance Agency (sefa) on behalf of the Department of Tourism and follows a blended finance approach to provide a combination of debt and grant financing to facilitate equity acquisition and new project development in the tourism sector by black entrepreneurs.
Under the Fund Management Agreement between the Department of Tourism and sefa, the TEF aims to increase growth, transformation and stimulate more inclusive participation in the tourism sector in line with the targets for the Tourism B-BEE Sector Codes and address funding obstacles faced by enterprises in the tourism sector.
But as of 01 October 2024, sefa, the Small Enterprise Development Agency (Seda), and the Cooperative Banks Development Agency (CBDA) officially merged to create the Small Enterprise Development and Finance Agency (Sedfa).
The TEF fund was relaunched in November 2023 following a 2-year hiatus after lobby group AfriForum and trade union Solidarity brought the case before the High Court, contesting the legality and rationality of the 51% black-owner/managed qualification criteria for the fund.
De Lille said the relaunch of the TEF in 2023 and the subsequent application process saw a high level of interest from businesses applying for funding.
However, she said the first year of the application adjudication process was “painfully slow” and a number of interventions were made to enhance the administration of the TEF by sefa,.
“The administration of this fund and application processing has been too slow and despite all sefa has done to improve on the management of the TEF, efforts which I had impressed on sefa to work hard on, I remain seriously concerned about the speed at which decisions are taken on TEF applications and the rate at which sefa disburses funds to the approved applicants,” de Lille said.
“The more delays tourism businesses face in accessing finance, the more we are not achieving transformation and the creation of the much-needed jobs in the tourism sector.”
The Federated Hospitality Association of Southern Africa (Fedhasa) yesterday said it was pleased that de Lille was enacting the necessary changes – both to ensure that the rollout of the TEF will happen in an acceptable time frame and that recipients are paid timeously.
Fedhasa national chairperson, Rosemary Anderson, said getting TEF on track was a priority, so the recipients of the TEF can capitalise handsomely on the expected increase in tourists visiting South Africa’s shores.
“If we can show the success of this funding programme, not only will Treasury look on this programme favourably (and potentially extend more funding to it), but we can get international entities to match funding and significantly add to the TEF,” Anderson said.
“We look forward to the Minister’s announcement regarding the way forward, and the additional partners who will be contributing towards the success of this programme.”
Sefa has reported that they are expanding on outreach activities hosting webinars to provide step-by-step guidance to help applicants navigate the TEF application process to improve their chances of success.
“I am appealing to sefa to continue putting more meaningful work and effort into ensuring that applicants access the TEF urgently, and as agreed with them, to be diligent in discharging their responsibilities in managing the TEF,” De Lille said.
“The Department of Tourism will not be renewing its contract with sefa for the next phase of the Tourism Equity Fund and I want to apologise to the tourism sector for the poor performance of the application adjudication process.”
BUSINESS REPORT